Can I Claim My Student as a Dependent?

You worked hard to help your child get into college. Now there are tax credits, scholarships and loan deductions that you haven’t had to deal with before. If this is your first time filing your taxes since your child went off to college, here are some of the questions you may be asking this tax season.

Can I claim my student as a dependent?

If your child is a full-time college student, you can claim them as a dependent until they are 24. If they are working while in school, you must still provide more than half of their financial support to claim them. Be aware that if your child makes more than $12,000 per year, they must file their own return. You can still claim them as a dependent even if they file their own return.

Should my dependent claim education credits?

If you claim your college student as a dependent, you may be eligible for education tax credits like the American Opportunity Credit or the Lifetime Learning Credit. However, there are income thresholds for these benefits. If you exceed the income threshold, your child could be eligible for the credit as long as you don’t claim them as your dependent. If you have more than one child and they are only eligible for the Lifetime Learning Credit, it may be more beneficial for all if you don’t claim them as dependents. Learn more about how education tax credits work here.

What new tax forms will I need?

If you paid tuition or fees to the college or university for your student, they should receive a Form 1098-T. It will show how much you paid or how much you were billed. It covers tuition, fees, and other expenses directly related to their courses. Use it to calculate what tax benefits you will be eligible for if you were the one paying the fees.

You may also receive a Form 1098-E from the lender you pay loan interest too. Once you have this form you might be able to write some interest off as a deduction. Read more about the student loan interest deduction here.

Can I claim my student’s income on my tax return?

If your student has a part-time job and made more than $12,000 in prior years or $2,100 in 2018, they are required to file their own tax return. You can still claim them as a dependent, but you won’t be able to claim their income on your return. This should not affect what you can and can’t claim for college expenses.

If your student made less than $2,100 in 2018 or $12,000 for prior years, they are not required to file their own tax return. You do not have to claim their income if they are not filing their own return.

Do I have to pay taxes on my child’s scholarship?

It depends. Certain scholarships are tax-free. However, you must use the money to pay for qualified education expenses. Read more on college scholarships and tax here.

Are there any tax-free college savings plans?

Yes. If your child is not in college yet or if you want to start thinking about saving for your next student, consider a 529 savings plan or a Coverdell college savings account. Both grow tax-free from both federal and state income tax. And funds that are withdrawn to be used for education expenses are not taxable.

This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.